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Mike Ashley deposited £35 million to show he meant business in last-minute bid for BHS

Mike Ashley's Sports Direct was involved in a failed rescue bid for BHS. Credit: Reuters

Last week when Dominic Chappell appeared before MPs, he made the remarkable claim that BHS could have been a saved from administration by Mike Ashley of Sports Direct but when Sir Philip Green found out about his eleventh-hour rescue bid he went "absolutely insane" and tried to block it.

Mike Ashley had already told MPs he "100% wanted to buy BHS", tonight we can reveal a little more about how close he came to pulling off a deal.

We've seen emails that passed between Reynolds Porter Chamberlain, the legal advisers to Mike Ashley's Sports Direct, and Olswangs, who were representing Dominic Chappell - the man who bought BHS from Sir Philip Green a year ago.

Ashley's interest in buying the business began on Thursday 21st April. At 11:00am that morning the board of BHS had met at the company's headquarters at Marylebone House in London and agreed that the game was up.

BHS had received a winding up notice on 15th April from HMRC for £2.6 million which could not be met.

The directors, including Dominic Chappell and Darren Topp voted unanimously to put the company into administration. It was agreed that staff would be told the following morning and Duff & Phelps formally appointed.

Dominic Chappell giving evidence to MPs last week. Credit: PA Wire

Later on that afternoon Dominic Chappell met with Mike Ashley, informed him that BHS was insolvent and Ashley indicated his desire to mount a rescue bid. The board of Retail Acquisitions convened at Olswangs offices in High Holborn. An acquisition team from Sports Direct, headed by Justin Barnes, joined them. Talks went on through the night in attempt to reach agreement.

How much progress was made? The flurry of emails that followed show that on 23rd April, two days before BHS went into administration, Mike Ashley placed £35 million in his lawyer's client account in response to a request from Sir Philip Green.

Green was owed £35 million by BHS secured by a floating charge. The emails suggest that when Green found out about the bid, he agreed not to put BHS into administration and to allow Ashley the weekend (but no longer) to negotiate on the condition that, £35m was put into a solicitors account, presumably to indicate he was serious.

Sir Philip Green. Credit: PA Wire

The emails suggest that Dominic Chappell's company, Retail Acquisitions, was prepared to sell BHS to Mike Ashley's Sports Direct for £1 whilst retaining a 49% stake in BHS's international business. A Share Purchase Agreement had been drafted to that effect.

A big problem for Ashley appears to have been the BHS final salary pension scheme which we know had a deficit of £571 million. The correspondence makes it clear that Sports Direct was seeking an absolute and legally binding reassurance from the pension authorities that they would wound have no responsibility for this liability.

Did they get it? Perhaps not. On Sunday 24th April at 20:41 talks ended without Sports Direct making a formal offer.

BHS was insolvent and on Monday 25th April was placed in administration. The company is in the process of being wound up, 11,000 jobs are set to be lost.

Some 11,000 jobs are at risk because of BHS' collapse. Credit: PA Wire

What's startling is that Sports Direct's interest didn't end on the 25th.

Throughout the week that followed the company was pursuing its interest in buying the shares in BHS Group Ltd from Dominic Chappell's Retail Acquisitions while simultaneously negotiating the potential purchase of BHS, debt-free and without the pension liabilities, from the administrator. Neither deal ended up succeeding .

On Thursday April 28th the directors of Retail Acquisitions unanimously approved the sale of BHS for £1 (this time without any stake in the international business). A signed Share Purchase Agreement was sent to Sports Direct but a deal wasn't concluded.

On April 29th an email from Ashley's legal advisors expresses the hope that Sports Direct "will be able to save 9,000 jobs ...contingent on a deal completing quickly". Once again the transaction relied on "an amenable deal" with the Pension Protection Fund, the pension trustees and the Pensions Regulator.

MPs will inevitably ask Sir Philip Green for his version of events when he appears before MPs tomorrow.

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